The witness codenamed Person 66 began giving evidence in the Federal Court on Monday, but stopped short about a military operation in 2012 under the Victoria Cross recipient.
The war hero allegedly ordered the younger soldier to execute an unarmed Afghan prisoner in a cornfield, and Person 66 refused to answer any questions on Monday about the incident due to "self-incrimination".
Following the event, Mr Roberts-Smith allegedly said he had "blooded" the rookie, referencing a phrase where a young trooper gets their first kill in action, according to court documents.
Mr Roberts-Smith, 43, is suing The Age, The Sydney Morning Herald and The Canberra Times over reports claiming he committed war crimes and murders in Afghanistan between 2006 and 2012.
Australia's most decorated living war hero denies all the claims against him, while the media outlets are defending them as true.
On Tuesday, Person 66's barrister Jack Tracey asked Justice Anthony Besanko not to compel his client to give the evidence, saying it involved "such a grave form of alleged criminality".
Mr Tracey posed the risk of criminal prosecution at home and in the International Criminal Court and stressed his client's mental health would also suffer.
"(The) effect of giving evidence in this proceeding would put his wellbeing and life at risk," he said.
Nicholas Owens SC, representing the media outlets, disagreed, saying there was no risk of foreign law interfering, and that Person 66 had rights to international immunity.
"We are seeking to compel this witness to confess to murder," he said.
The only other SAS witness who objected to speaking about another alleged execution, even granted a certificate of immunity from Justice Besanko, was Person Four.
Mr Owens did not compel Person Four to speak, but said on Tuesday the situation with Person 66 was vastly different.
The news outlets Mr Owens represents are seeking to rely on a defence of truth to win their case.
And while Mr Owens said he did believe they could be successful by proving other incidents occurred, this alleged execution in Syahchow was significant.
"It is ... possible that I could win this case by only proving the murder at Syahchow.
"It is an independent path home to victory."
Person 66 follows evidence from federal government MP Andrew Hastie, who was also present at the mission where the alleged execution occurred.
Mr Hastie - the assistant minister for defence who was a captain in the Special Air Service Regiment between 2010 and 2015 - previously told the court Mr Roberts-Smith walked past him following the alleged execution.
"He looked me in the eye and said 'just a couple more dead c***s'."
Mr Hastie denied he had been critical of Mr Roberts-Smith to raise his own profile as a parliamentarian or that he had come to court to support the newspaper's claims because they were giving him financial assistance in another legal matter.
Justice Besanko is due to hand down his decision about Person 66's evidence on Wednesday.
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